Apple Store strategy: “Position, permission, probe”
Sun, Oct 21, 07
In Radiohead: Pricing is Designing I argued that pricing affects the success of a product or a service so much that it should come under the purview of design. It’s even harder then to argue that the experience of a potential customer at a company’s retail store should not likewise be a matter of strategic design. That experience has to be carefully orchestrated, just like any other aspect of the product’s lifecycle. Exhibit A:
At the heart of Punching In: The Unauthorized Adventures of a Front-Line Employee lies Frankel’s quest to find out how some of the giants of commerce turn thousands of average job applicants into loyal—even fanatical—workers. How do they identify and recruit workers who will best fit their companies? How do they indoctrinate employees into their corporate cultures and make them perfect messengers of their brands? Along the way Frankel pauses long enough to wonder why he is so often immune to corporate attempts to win employees over.
Among Frankel’s account of jobs he had at various companies like Whole Foods, Enterprise Rent-A-Car, Gap, Container Store and UPS, is his first day at an Apple Store, as excerpted in Fast Company:
Once on staff, I learned the difference between a gigahertz and a gigabyte, but more important, I saw that, like the iPod’s user interface, training of Apple Store employees has been carefully designed. A series of podcasts I listened to and watched showed that selling was all about the approach. I shadowed other workers as they executed the company’s three-step sales process. They explained to customers that they had some questions to understand their needs, got permission to fire away, and then kept digging to ascertain which products would be best. Position, permission, probe.
All this sets the employee’s on-the-job attitude. At an Apple Store, workers don’t seem to be selling (or working) too hard, just hanging out and dispensing information. And that moves a ridiculous amount of goods: Apple employees help sell $4,000 worth of product per square foot per month. When employees become sharers of information, instead of sellers of products, customers respond.
With such attention to customer experience — the other side of employee training — no wonder the Apple Store retail chain was the fastest in U.S. corporate history to reach annual sales of $1 billion, and remains the most profitable. This year, Fortune named Apple “America’s best retailer.” CEO Steve Jobs explains how they prototyped the Apple Store concept:
“One of the best pieces of advice [Gap CEO and Apple board member] Mickey [Drexler] ever gave us was to go rent a warehouse and build a prototype of a store, and not, you know, just design it, go build 20 of them, then discover it didn’t work,” says Jobs. In other words, design it as you would a product. Apple Store Version 0.0 took shape in a warehouse near the Apple campus. “Ron and I had a store all designed,” says Jobs, when they were stopped by an insight: The computer was evolving from a simple productivity tool to a “hub” for video, photography, music, information, and so forth. The sale, then, was less about the machine than what you could do with it. But looking at their store, they winced. The hardware was laid out by product category – in other words, by how the company was organized internally, not by how a customer might actually want to buy things. “We were like, ‘Oh, God, we’re screwed!’” says Jobs.
But they weren’t screwed; they were in a mockup. “So we redesigned it,” he says. “And it cost us, I don’t know, six, nine months. But it was the right decision by a million miles.”
Along with the physical setting, the differentiating factor at the Apple Stores is the human element:
“When we launched retail, I got this group together, people from a variety of walks of life,” says [ex-Target merchandizing chief and SVP of retail at Apple Ron] Johnson. “As an icebreaker, we said, ‘Tell us about the best service experience you’ve ever had.’” Of the 18 people, 16 said it was in a hotel. This was unexpected. But of course: The concierge desk at a hotel isn’t selling anything; it’s there to help. “We said, ‘Well, how do we create a store that has the friendliness of a Four Seasons Hotel?’” The answer: “Let’s put a bar in our stores. But instead of dispensing alcohol, we dispense advice.”
Johnson is telling the story as he walks the floor of Apple’s San Francisco store, a perfect stainless-steel box punctuated by a massive skylight, which is throwing sun on a thirtysomething couple getting a tutorial at the Genius Bar. “See that?” says Johnson. “Look at their eyes. They’re learning. There’s an intense moment – like when you see a kid in school going ‘Aha!’”
The two crucial elements — physical and human — when integrated under a strategic design umbrella produce an immediate effect that’s palpably evident the minute a customer walks into an Apple Store:
“People haven’t been willing to invest this much time and money or engineering in a store before,” says the Apple CEO, his feet propped on Apple’s boardroom table in Cupertino. “It’s not important if the customer knows that. They just feel it. They feel something’s a little different.”
So far similar attempts by Apple rivals have been decidedly unimpressive. The Gateway store chain has long been shuttered. Microsoft, Sony, Samsung, Panasonic and others have had various “showcase” stores (mostly without any in-store sales capability) in New York and San Francisco. Dell, the new anti-Apple company, is rumored to start a new retail chain based on the Apple model.
What would be interesting is if Dell or another company can succeed at retail without Apple’s strategic retail design approach and “position, permission, probe” in-store sales strategy described by Frankel. Such training and attention to detail doesn’t come cheap. Apple took an enormous corporate risk with its retail stores and was universally derided at the time. Can risk-averse competitors like Dell or Acer, with far smaller profit margins, afford to duplicate Apple’s experience? And in this ‘era of user experience’ can they survive without being able to?